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Welcome to this month's edition of the Tax and Business Alert. Our goal is to provide you with current articles on various tax and business topics. The articles are intended to keep you up to date on trends and issues that may impact your business and personal financial affairs. Please contact us if you have questions about any of the issues discussed. |
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Head of Household Filing Status The Unearned Income Medicare Contribution Avoid Gift Treatment for Large Medical Expenses Selecting a C Corporation’s Tax Year
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Head of Household Filing Status
Failure to use head of household (HOH) filing status is a common tax filing mistake. HOH status is preferable to single or married filing separately status because the tax rate brackets are more favorable (except for the 35% single bracket) an Capital Gains and Losses Technically, almost everything you own and use for personal, pleasure, or investment purposes is a capital asset. Capital assets include, but are not limited to, homes, household furnishings, stocks, bonds, and mutual funds. The Unearned Income Medicare Contribution Beginning in 2013, taxpayers with modified adjusted gross income (MAGI) over $200,000 ($250,000 for a joint return or $125,000 for married filing separate) will be subject to a 3.8% surtax called the Unearned Income Medicare Contribution (UIMC) on net investment income. Avoid Gift Treatment for Large Medical Expenses The annual exclusion for gifts remains at $13,000 for 2012. This limit applies to the total of all gifts, including birthday and holiday gifts, made to the same individual during the year. Taxable or Nontaxable Income? Most of the income we receive is taxable, but certain types of income are only partially taxed or not taxed at all. Selecting a C Corporation’s Tax Year Businesses that operate as C corporations have substantial flexibility when selecting a tax year. However, businesses that operate as partnerships or S corporations are restricted by law in their choice of a tax year. |
d the standard deduction is larger.